What we’re reading (7/7)
“U.S. Treasury Yields Extend Steep Decline” (Wall Street Journal). “Yields on U.S. government bonds reached fresh multimonth lows on Wednesday, reflecting investors’ anxiety about the economic outlook and new concerns about the highly contagious Delta variant of Covid-19. In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 1.313%, according to Tradeweb, compared with 1.369% on Tuesday.”
“Can Individual Investors Beat the Market?” (Coval, Joshua D., David Hirshleifer, and Tyler Shumway, Review of Asset Pricing Studies). An interesting new study: “We document persistent superior trading performance among a subset of individual investors. Investors classified in the top performance decile in the first half of our sample subsequently earn risk-adjusted returns of about 6% per year. These returns are not confined to stocks in which the investors are likely to have inside information, nor are they driven by illiquid stocks. Our results suggest that skilled individual investors exploit market inefficiencies (or perhaps conditional risk premiums) to earn abnormal profits, above and beyond any profits available from well-known strategies based on size, value, momentum, or earnings announcements.”
“Mortgage Applications Sink To Their Lowest Level Since Before The Pandemic Hit” (CNBC). “Mortgage demand fell for the second week in a row, as low inventory and high home prices continue to weigh on the housing market. Mortgage applications decreased 1.8% last week, according to the Mortgage Bankers Association’s seasonally adjusted index, falling to the lowest level since the beginning of 2020, before the coronavirus pandemic started to take a toll on the economy.”
“Which Airlines Will Soar After The Pandemic?” (The Economist). “Some airlines are struggling despite having cut costs, slashed fleets and shored up balance-sheets with commercial loans. Others are brimming with confidence. Big American and Chinese ones with large, increasingly virus-free domestic markets will return to profitability first. Frugal low-cost carriers that went into the pandemic in the black are close behind. By contrast, airlines that depend on lucrative long-haul routes may struggle if, as seems almost inevitable, business travellers substitute Zoom for at least some flights. Regional companies in places still ravaged by covid-19, such as India or Latin America, look precarious. And the airspace between those losers and the industry’s winners is widening.”
“Betting Against Meme Stocks Could Get You Seriously Burned” (CNN Business). “Many investors are still betting against top momentum and Reddit meme stocks — despite getting burned in the process. Richard Branson's space tourism company Virgin Galactic is one of the most heavily shorted stocks among customers of online broker TradeZero America. Shares of Virgin Galactic (SPCE) have nearly doubled this year due to optimism about the demand for suborbital travel.”
